Computerized auction systems have become increasingly popular tools for organizations and individuals to exchange products and services. The growth in the popularity of computerized auction systems can be attributed to the fact that a large number of auction participants, namely offerors and bidders, can gain access to vast global markets via networks. The numerous auction systems operating on these networks offer bidders a convenient way to search, view and acquire a seemingly endless range of products and services.
The majority of network-based auction systems utilizes a “standard” or rising price auction model. In a standard auction system a single lot composed of one or more products or services is offered to potential bidders until the expiry of the auction period. The auction period may be pre-determined or terminated at the discretion of the offeror. During the auction period, potential bidders may opt to place one or more bids for the products or services. Each successive bid is displayed by the auction system to inform all of the bidders of the current high bid price. Upon the termination of the auction, the product or service being auctioned is sold to the bidder having the highest bid price or, alternatively, not sold if the reserve price has not been met.
Although commonly used, standard auction systems are impractical in many situations, such as when an offeror wishes to sell a large number of lots of products or services or when the products or services are perishable. Since most computerized standard auctions last for several days or even weeks, it may take an offeror months to sell off a large number lots of products or services. During this time period, perishable products or services may have spoiled or the demand may have waned.
Auction systems using the standard model are also inefficient from the perspective of a bidder. In order to successfully bid on a lot, a bidder must monitor the progression of competing bids over the full duration of the auction.
These concerns are addressed to some extent by a “reverse” or declining price auction model. In a declining price auction model, a lot or lots of similar products or services are offered at a high starting price. The price is decreased uniformly at regular intervals until a bid is placed whereby the lot is sold to the bidder. The successful bidder then has the option of purchasing one or more of the offered lots.
Auction systems using the declining price auction model are more commonly used by sophisticated offerors and bidders. While some applications of the declining price auction model over a network have successfully implemented uniform declining pricing, these applications fail to react to market conditions when setting the prices and values for a lot or lots of products and services, such as, for example, the starting price, possible reserve price and decline rate. When market demand for lots of products or services fluctuates, existing declining price auction systems do not adjust the prices and values for the current lot and/or subsequent lots to reflect changes in the market conditions. Under certain market conditions, such as in the presence of very high demand for a lot or lots of products or services, the true market value for the lot or lots may not be realized.
Additionally, auction systems using a declining price auction model are difficult to implement on diverse technologies because of the utilization of varied terminals, communication modes and operating systems. As a result, declining price auction systems over networks have rarely been used and often unsuccessfully.
Furthermore, dynamic pricing has been solely used in a declining price auction model. However, dynamic pricing could also be used in a rising price auction model. In a dynamic rising price auction, the offeror offers to purchase a lot or lots of products or services at a dynamically rising price. The price of the lots increases until a bidder is willing to sell or buy a lot or lots of products or services at the current price. Dynamic pricing may also be used in an auction that combines a declining price auction and a rising price auction or a rising price auction and a declining price auction.
Accordingly, the present invention provides a system and method for conducting one auction or more than one concurrent auctions of one or more lots of products or services. The present invention further provides a system and method for auctioning one or more lots of products or services using dynamic prices and values.